Tax overhaul is needed

Mar 25 2009 by Peter McCusker, The Journal

THE UK’s corporate tax system needs a strategic overhaul if investment in manufacturing is to drive the upturn and help build a high value UK economy, according to a review of the current approach by EEF, the manufacturers’ organisation.

‘A Manufacturing Future – Competitiveness and taxation in the UK’, says much of the UK’s business tax system remains rooted in the past and is actively constraining manufacturers’ investments, compounding the credit crunch and limiting the extent and benefits of a balanced economy.

The EEF is urging government to adopt a more coherent tax strategy which will promote investment by domestic companies and encourage greater levels of inward investment in the UK by overseas companies

EEF external affairs specialist, Tony Sarginson, said: “Government must match its commitment to promoting a more balanced economy in which manufacturing plays a greater role by addressing the current failings in our tax system.

“We need a system which continually evolves to reflect the realities of rapidly changing technologies and global competition. In particular, the government must ensure that the taxation of investment reflects the true costs of high-value manufacturing investment”

According to the report, the current treatment of capital expenditure reflects neither advances in technology, nor the investments manufacturers need to remain competitive.